woman with calculator and laptop budgeting getting out of debt

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Having a lot of debt makes life harder. Monthly debt payments can eat up way too much of your income, leaving you constantly strapped for cash. Not only that, but having too much debt can make it difficult to build an emergency fund or qualify for a mortgage and other loans, which can mean sacrificing your long-term future.

Unfortunately, debt is something far too many people have in common. According to a recent report from Lending Tree, Americans owed a collective $804 billion on their credit cards as of the third quarter of 2021. Meanwhile, the average unpaid balance per borrower worked out to $6,569.

That’s a lot of debt to pay off, but it’s not insurmountable. And even if you have more debt than that, there are some strategies you can use to pay off debt faster, save money or both. So if you’re hoping to ditch debt and start saving money for the things you really want, here are six of the best ways to do it.

1. Pay more than the minimum payment

If you have a bunch of credit cards and you’re only making the minimum payment on them, it’ll take decades for you to get out of debt. This is especially true if you have a high annual percentage rate (APR) on your credit card, and if you’re still using your cards for purchases while you’re carrying debt, it’s almost guaranteed that you’ll never catch up.

Consider this example: Someone who owes the average balance of $6,569 may have a minimum monthly payment of around $131. If the APR on this card is 19%, it will take 101 months of paying $131 a month before the debt is paid off. That’s over eight years to pay off the balance, and they’ll pay $6,604 in interest along the way!

But by boosting their monthly payment to $170 per month, they could become debt-free in just 61 months and reduce their interest costs by nearly half, to $3,672. And if they were able to pay $200 per month, they could pay off their balance completely in 47 months and pay just $2,777 in interest.

2. Create a debt snowball

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If you’re juggling multiple debts and feeling overwhelmed, one way to manage them all is to consider creating a “debt snowball.” With this debt repayment method, you’ll make the minimum payments on all your largest debts, then funnel any extra money you have toward your smallest debt each month. As the smallest debt gets paid off over time, the money that was going toward that debt is “snowballed” into paying off the next-smallest debt, and so on.

The debt snowball method can be advantageous since it helps people get rid of some of their smallest bills right away. This can help build momentum during the debt repayment process, and it reduces the number of monthly bills you need to pay as you go.

3. Use a debt avalanche

The “debt avalanche” method is basically the opposite of the debt snowball. With this strategy, people make the minimum payments on all their debts, then funnel any extra money they have toward their debt with the highest APR. Debts with the highest APRs are wiped out over time, at which point individuals “avalanche” those payments toward the debt with the next-highest APR.

This debt repayment method helps save on interest since you’re paying off your highest-interest loans and credit cards first. However, it often leaves users paying a higher number of bills longer since it focuses on APRs instead of balances owed. Both the debt avalanche method and the debt snowball method are good ways to climb out of debt — it’s just up to you which one you prefer.

4. Apply for a debt consolidation loan

Another way to pay off debt fast involves applying for a debt consolidation loan. With this debt management strategy, you use a personal loan to pay off all your other existing debts. This lets you ditch high-interest credit cards and other high-interest debts while trading them in for a single loan with a fixed interest rate and a fixed monthly payment.

Considering personal loans often come with no annual fees, no origination fees and fixed APRs as low as 6%, this strategy can be used to get out of debt faster and save money along the way. Going from multiple bills each month down to just one can also make budgeting significantly easier.

5. Sign up for a balance transfer credit card

A second debt consolidation method involves signing up for a balance transfer credit card. With this type of credit card, consumers can get a 0% APR on balance transfers for as long as 21 months. A balance transfer fee (usually 3% to 5%) applies, but having that entire time with zero interest makes it easy to pay down debt considerably faster. After all, every cent paid toward debt at a 0% APR goes directly to whittling down your balance.

While balance transfer credit cards can help consumers save big on interest, it’s important to factor in balance transfer fees. Also, remember that 0% APR offers don’t last forever, and if you haven’t cleared your debt before your introductory offer expires, you’ll pay a high variable APR after your promotional period ends.

6. Boost your income

cash in hands with money underneath

Earning more money is another strategy that can help pay down debt faster, although this step is often easier said than done. You may not be able to pick up more hours at work, and a raise may not be in the cards this year. But in many cases, the best way to earn more income involves picking up other types of work. Perhaps you can work on a “side gig” in your spare time, become a part-time consultant in your field, or apply for a second job on top of the one you have.

Whatever you do to boost your income, the key to maximizing your efforts is throwing all your extra cash toward your debts each month. If you work extra hours and spend that money instead, you’re not going to get out of debt any faster. But if you put the extra money into paying off debt, you’ll improve your debt-to-income ratio and make it easier to save money and qualify for the best financial products in the future.

Is debt consolidation a good idea?

Earning more money can definitely help you pay off debt faster, and the debt snowball and avalanche methods can help you reduce your bills quickly or optimize your interest savings. However, debt consolidation is a different situation altogether, since you’re trading in your current debts for a new loan or balance transfer credit card with different terms.

Generally, debt consolidation can be a good idea, but it all depends on how it’s done. For example, consumers who consolidate debt with a plan in mind can do well paying off their bills at a lower APR (or zero interest), and they can save time with a shorter loan term.

However, debt consolidation comes with risks, mostly because it opens the door to racking up more debt over time. We say this because debt consolidation lets you transfer all your debts to a new credit card or personal loan, which means all the cards that previously had a balance suddenly are empty and available again.

So if you decide to consolidate your debts, make sure you don’t use it as an excuse to start overspending on your newly available credit cards. While cancelling a credit card can hurt your credit score by reducing your available credit, it’s probably not a bad idea to put those unused cards in a sock drawer so you aren’t tempted to run up additional debt while you’re still in the process of paying down your existing debt.

How to pay off debt fast

Any of the six methods outlined here will help you pay off your debt faster and get yourself on a sound financial footing. But regardless of which debt repayment strategy you pick, there’s one simple, golden rule you should remember, no matter what…

If you want to get out of debt, you have to stop digging.

By and large, this means being disciplined with your credit cards moving forward. Only spend what you can afford to pay in full every month on a credit card and nothing more. If you feel that having a credit card is going to be too tempting, putting an end to credit card use altogether — at least until you’re debt-free — and focusing on using cash or debit cards in the short term could be the best debt reduction strategy of all.

Need help getting rid of debt? Find out which cards CNN Underscored chose as our best balance transfer credit cards of 2021.

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